Tyson Swine Reduction Under Investigation

Only 48 hours after Tyson Foods Inc. said it would eliminate 200 positions at its live swine operations to strengthen the long-term viability of the rest of its company, the U.S. Department of Agriculture started an investigation into the Springdale company.

Tyson Foods released a statement Aug. 18 stating it would restructure its hog business and discontinue relationships with 132 hog producers in Arkansas and eastern Oklahoma.

On Aug. 21, Department of Agriculture spokesman Jerry Redding said the agency would examine the “honesty” of the contracts between the company and the hog producers.

The Agriculture Department oversees the Packers and Stockyards Act of 1921. The Act prohibits deceptive and fraudulent business practices in the hog industry. About 159 farms were affected by Tyson’s announcement.

John Tyson — Tyson Foods’ chairman, president and CEO — said the restructuring was imminent.

“We’ve been running this division at an operating loss,” he said.

The Agriculture Department’s “rapid response team” of about two or three investigators was sent to Tyson’s headquarters Aug. 20.

The move, which will reduce fourth-quarter pretax earnings by between $20 million to $30 million, will reduce the total number of sows by 30 percent to 70,000. The phase-out should be complete in March.

Tyson purchased beef and pork meatpacker IBP Inc. on Sept. 28, 2001.